Ensure that the workstation NIC has the DNS server set as the domain controller IP. The workstation uses DNS to contact the correct domain controller. If the DNS is set to an external server, or a server that does not have the domain controller referenced, then it will never find the DC and it will never be able to enumerate the directory/network. Thus the error message.
You have done it CybertecOne.

The problem that TCP/IP DNS section was pointing mistakenly to a default gateway (router ip address 192.168.0.1) which it should not.

When I changed that to point to the domain controller (server 2003 and DNS as well) ip address 192.168.0.50 it worked like charm.

Appreciate your help and thanks